Just Ask!

At CEG Worldwide we make extensive use of commissioned in-depth research. Sometimes, as we dig through the data, we find contrasts and anomalies that lead to a kind of “Aha!” moment, the sort of thing that surprises us at the same time that it makes clear how most advisors can easily boost their businesses.

One such “Aha!” moment concerns the best way to grow assets under management. In 2007, we undertook an extensive study of 2,094 financial advisors across all three channels — registered independent advisors (19.8 percent of those studied), independent broker-dealer representatives (27.5 percent) and brokers employed by wirehouses (52.7 percent). What we found, first of all, is that 87.6 percent of advisors surveyed were very concerned about significantly growing their assets. (The only concern that ranked higher was finding wealthier clients.)

Since there are really only two ways to increase assets — first, to acquire new ideal clients, and second, to capture additional assets from existing clients — we expected to find advisors acting on their concerns and employing strategies to increase assets under management. Since we know that it’s far easier to get additional assets from existing clients than it is to find additional ideal clients, we might expect that most advisors would be regularly asking their existing clients for additional assets. Instead, we found that only 10.9 percent of surveyed advisors regularly ask their existing clients for additional assets to manage.

Why isn’t asking for additional assets from existing clients at the forefront of every advisor’s mind? This should be one of the basic strategies undertaken by all advisors to grow their businesses, yet so very few do this. What can possibly explain this?

What we’ve found is that many advisors believe that if they do a great job for their clients, then their clients will automatically bring them additional assets. Just as it isn’t true that doing a great job will automatically generate referrals to new ideal clients, it simply isn’t true that doing a great job will automatically result in existing clients offering up additional assets to manage. Waiting for such “automatic offerings” amounts to a self-deluding business plan, one that simply isn’t proven by experience.

When and WhyRecently, we have been experiencing turbulent market conditions, and you might think that this is not a good time to ask for additional assets. But paradoxically, times such as these are perfect for capturing additional assets from existing clients.

Clients today are uneasy, and in many cases they have not even heard from their other financial advisors during these dark days. Advisors kid themselves into thinking that their clients are well-prepared for times such as these, but the truth is that no client is ever emotionally prepared for volatile markets. Clients need information, assurance and handholding, but far too few advisors regularly provide such comfort. You therefore have an excellent opportunity — right now — to make in-depth contact with your clients and provide the kind of comprehensive service that builds long-term trust and separates you from other advisors.

Another thing that advisors regularly kid themselves about is the percentage of their clients’ overall assets that they manage. Our research consistently shows that while most advisors think they have all of their clients’ assets, very few in fact do. So even if you think you probably have all of an existing client’s assets, you should still regularly follow the following five-step process.

Five Steps to Additional AssetsThe first step is to set expectations with your clients. You set expectations by reminding your clients in every meeting that you are keenly interested in their overall well-being, which includes taking into account the way other advisors are managing their assets. Many clients define diversification in terms of having multiple advisors manage their portfolio. But in order to avoid overlap, someone has to be at the helm, orchestrating the entire portfolio. Without such orchestration, things can really go awry in a portfolio, with over-concentration or conflicting strategies actually increasing the client’s overall risk.

The second step is to review the overall relationship with your client and offer to go to the next level. Talk about what you already do for the client — how you already help him or her — and offer to be the overall portfolio coordinator, the person at the helm. Say, “We’d like to give you a no-obligation total portfolio review to look at what’s happening across all of your assets. We want to make sure that you’re in fact not increasing your risk because of over-concentration or conflicting advice.” Few clients will turn down a free, comprehensive, total portfolio check-up.